School employee health benefits represent an enormous cost for Michigan’s school districts. Behind employee salaries, health benefits are the second largest personnel cost in the typical school budget. Naturally, school districts are keenly interested in containing these costs while providing benefit levels that enable districts to recruit, reward and retain the best and brightest employees.

Even though health insurance costs have been rising faster than inflation nationwide over the past 20 years,[21] these costs can be controlled through a few effective management techniques. There are two basic issues to consider for effectively managing employee health benefits. First is the structure of the benefits themselves (benefit design). The second is the company that will administer the benefit program. Without attending to both of these cost factors, public school districts can easily find their budgets unnecessarily bloated.